Positive net present value project distributed

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Reference no: EM131010024

In general, how is the increase in the value of the firm produced by a positive net present value project distributed between the firm's creditors and shareholders? (Note that the firm's value has increased by the positive net present value of the project.)

a. The creditors receive their interest payments from the project and shareholders receive the principal.

b. The positive net present value is distributed proportionately between creditors and shareholders based on the relative proportions of their holdings in the firm.

c. The total positive net present value of the project accrues to shareholders.

d. The total positive net present value accrues to creditors.

Reference no: EM131010024

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